He continued: “Decent compliant agencies like mine struggled to compete with the hidden margins employed by the majority of agencies via umbrella companies and T&S schemes. Only extreme efficiency has allowed my business to survive over the last 19 years of trading against unfair competition.

“Now, we should have a level playing field and my workers’ wages will remain the same and our charges will not go up.”

But Crawford Temple, chief executive of PRISM, a trade body for service providers and payment intermediaries in the temporary labour market, said he was disappointed the Chancellor had not announced a strategic review of tax legislation affecting contractors.

“Our members are still unable to invest in the future with any certainty, and the country’s growing army of contractors will continue to suffer the worst of both worlds. They are treated as ’employees’ by the taxman despite identifying more with the self-employed in the way they choose to work. It is important to remember these are people with no job security, who lack the same access to support, benefits and pensions available to ordinary employees.”

Meanwhile Julia Kermode, CEO of the Freelancer & Contractor Services Association (FCSA), a trade association for umbrella, accountancy and payroll providers, said: “When T&S comes into effect there is no question that we will see a skills shortage, as fewer workers will be willing to travel for assignments.

“There will undoubtedly be a knock-on effect and government policies that are heavily reliant on contractors will be hit. The new plans for HS3, Crossrail, M62 widening, 18-mile trans-Pennine tunnel will suffer along with other current infrastructure projects which rely on contractors.”

Other announcements in the Budget included:

Personal service companies (PSC) crackdown

As expected, the Chancellor announced that from April 2017, where the public sector engages an off-payroll worker through their own limited company, that body (or the recruiting agency if the public sector body engages through one) will become responsible for determining whether the rules on self-employment should apply, and for paying the right tax.

Abolition of Class 2 National Insurance contributions (NICs) for self-employed

The government will abolish Class 2 NICs for the self-employed from April 2018. The government will publish its response to the recent consultation on benefit entitlement for the self-employed in due course, which will set out details of how the self-employed will access contributory benefits after Class 2 is abolished.

Matt has worked in recruitment since 2000, and is a co-founder and director of Blues Point. He has a degree in French from Durham University and is a qualified chartered accountant. He looks after the financial and legal aspects of the business.
Interesting fact: Matt used to live in Blues Point, which is in Sydney, in 1998. Hence the name!